Skip to content
Know.itKnow.it
Create an animated lesson
On request

This article is free to read. Creating a lesson uses your daily or stored credits; review the language and settings before starting.

What is the sunk cost fallacy?

PsychologyLesson on requestFree to read

Quick answer

The sunk cost fallacy is the tendency to keep investing in something just because you've already put time, money, or effort into it — even when quitting would be the better choice. We feel we can't 'waste' what's already spent.

Key things to understand

  1. We stick with things because of past investment.
  2. Already-spent costs ('sunk costs') can't be recovered.
  3. It leads to throwing good resources after bad.
  4. Good decisions weigh future value, not past cost.

People also ask

What is the sunk cost fallacy?
Continuing something because of what you've already invested, rather than its future value.
What's an example of the sunk cost fallacy?
Finishing a bad movie just because you paid for the ticket, instead of doing something you'd enjoy more.
How do you avoid the sunk cost fallacy?
Base decisions on future costs and benefits, ignoring money or time you can't get back.